European shares pause, RSA leads fallers

* FTSEurofirst 300 off 0.1 percent

* RSA, Lufthansa hit by dividend news

* GFT Markets targets 2,700 for Euro STOXX 50

By Tricia Wright

LONDON, Feb 20 (Reuters) - European shares dipped on Wednesday, consolidating after a steep rally in the previous session as investors were confronted with news of weak earnings, though some expected further near-term gains.

Britain's biggest business insurer RSA was the standout faller on the FTSEurofirst 300, off more than 14 percent in brisk trade, after it slashed its 2012 dividend by a fifth and flagged a further cut this year.

The news prompted broker Panmure Gordon to downgrade its rating on the firm, whose dividend has traditionally been among the highest in the European insurance sector, to "sell" from "hold", saying it had "removed a key prop to the share price".

Trading volume in RSA was robust, at more than seven times its 90-day daily average, against that for the FTSEurofirst 300 on 42 percent of its 90-day daily average.

The FTSEurofirst 300 has faltered this month after posting gains in January.

Traders noted a degree of caution on Wednesday ahead of the release after the market close of the minutes to the U.S. Federal Reserve's January policy meeting. These could provide clues as to the Fed's future bond-buying plans.

The FTSEurofirst 300 was down 0.1 percent at 1,170.35 as of 1145 GMT, having jumped 1.1 percent on Tuesday on robust German sentiment data.

GFT Markets technical analyst Fawad Razaqzada remained upbeat on the Euro STOXX 50 provided it holds above 2,600 on a closing basis, though noted it is encountering resistance at 2,670, the 50-day moving average, as it did earlier on Wednesday.

"This (weakness) is likely to be short-lived... with sentiment remaining defiantly bullish. Once the index breaks above 2,670 then we should see some more gains, with 2,700 being the first bullish target, followed by 2,750."

Uncertainty surrounding the outcome of Italian elections on Feb. 24-25, which could result in a political stalemate rendering fiscal reforms tougher to implement, has been cited as a potential negative driver for equities.

But traders are encouraged markets remain buoyant, with Britain's FTSE 100 on Wednesday scaling fresh five-year highs. The FTSEurofirst 300 trades just shy of a two-year closing peak of 1,177.79 hit at the end of January.

"They are discounting those uncertainties (surrounding the elections), as good an indication on the underlying strength of the equity market as any," said Angus Campbell, head of market analysis at Capital Spreads.

In other earnings news, Deutsche Lufthansa sank 4.5 percent after the German airline suspended its dividend as it reported full-year results.

Around 250 percent of its 90-day daily average of shares had traded hands by mid-session.

In the current reporting season, 54 percent of STOXX Europe 600 firms have posted quarterly results so far, of which only 51 percent have beaten or met forecasts, in contrast with Wall Street where 79 percent of S&P 500 companies have reported results, with 77 percent meeting or beating consensus, Thomson Reuters Starmine data show.

Year to date, the STOXX Europe 600 has risen 3.5 percent, lagging a 7.3 percent advance on the S&P 500.

"European markets have recently underperformed the U.S. but at the end of the day it won't take much for people to take the view that it is time to buy the underperformer. And that should underpin the market," said Lex van Dam, hedge fund manager at Hampstead Capital, which manages around $500 million assets.